|Aside from giving MIRL leadership something to talk about, the reports of Baker Tilly and Everest were intended for three other purposes - liability cover for the Board, protection for Benavides should he lose his job and, finally, to give a reason for RIO to stay on the sidelines. But, what was revealed and not revealed in the letter from the Company should be of concern for shareholders.|
What has been confirmed is the substantial number of friends and relatives of Benavides receiving compensation from the Company and in management positions - a big problem that, for a host of reasons, all properly governed companies avoid.
First, there was nothing from Baker Tilly revealed that would indicate whether amounts paid and being paid represented reasonable compensation for the work done - something that is very hard to audit and I suspect was not part of their engagement. It is also an ungovernable situation, so unlike MIRL any sensible board will have rules in place to avoid the problem.
When so many people in an organization are related to or personally connected to the senior person, they become a group of 'insiders' versus other employees creating a divisive atmosphere, an unhealthy dependency on the senior person that diverts loyalty away from the interests of the company, and an ineffective division of duties and accountability that a properly functioning company depends upon. This shows up in spades in the case of MIRL whose performance in advancing Ollachea has been very poor and there has been nothing provided by way of a plan on which they would be held accountable - a basic for even the simplest of operations, let alone a public company. Also, the hiring of three people to c-suite positions, subsequently found to be unqualified and demoted, aside from being a bizarre and unprecedented situation, is a sign of management dishonesty and Board impotence (it's a clear firing offence and how could a functioning compensation committee ever allow such a thing?).
The primary role of the CEO is to ensure the right people are in roles to advance the company's interests and the board needs to make sure this is happening - not only have all parties failed in their duties, but the incestuous nature of the organization leaves little hope for the future. This is an organization in dire need of a clean sweep, especially with the clock ticking on a big pile of debt.